CBDT amends Guidelines relating to Compulsory Selection of Income Tax Returns for Complete Scrutiny

The Central Board of Direct Taxes (CBDT) has amended the guidelines relating to compulsory selection of returns for complete scrutiny of search cases.

Last month, the Board has issued guidelines for the compulsory selection of income tax returns for scrutiny for the assessment year 2022-23.

As per the guidelines, the Board prescribed the parameters for compulsory selection on completion of which, notice u/s 143(2) of the Act shall be served on the assessee through NaFAC.

The Board clarified that where return has been furnished in response to notice u/s 142(1) of the Act and such notice u/s 142(1) of the Act was issued due to the information contained in NMS Cycle/SFT information/information received from Directorate of I&CI, such return will not be taken up for compulsory scrutiny. Selection of such cases for scrutiny will be done through CASS cycle.

“The cases shall be selected for compulsory scrutiny by the International Taxation and Central Circle charges following the above prescribed parameters and procedure with prior administrative approval of Pr. CIT/Pr.DIT/CIT/DIT concerned. The cases which are selected for compulsory scrutiny by the International Taxation and Central Circle charges following the above prescribed parameters and procedure, shall, as earlier, continue to be handled by these charges,” the Board said.

The circular issued on Friday stated that for cases relating to search & seizure/requisition on or after April 01, 2021, the cases shall be selected for scrutiny with prior administrative approval of Pr. DIT/CIT/DIT concerned, who shall ensure that such cases are transferred to Central Charges u/s 127 of the Act within 15 days of service of notice u/s 143(2)/142(1) of the Act by the Assessing Officer concerned.

18% GST applicable on Sale of Used Car by Company: AAR

The Gujarat bench of the Authority for Advance ruling (AAR) has held that the sale of used cars attract 18% GST. State Member Mr. Atul Mehta and Central Member Mr. Arun Richard has further held that the value must the difference between the sale consideration and the depreciated value under the Income Tax Act, 1961.

The applicant, M/s. Dishman Carbogen Amcis Limited submitted that it purchased a new car [SUV of Specifications, Length > 4000 mm, and Ground Clearance > 170 mm] for Rs. 80 Lakhs on 16-02-2018 for use in its business and did not avail GST Input Tax Credit at the time of purchase as it is restricted under Section 17(5) of the CGST Act, 2017. Depreciation was claimed under the Income Tax Act, 1961 (43 of 1961).

The applicant has submitted that it intends to sell the same used car for a consideration of Rs. 55 Lakhs (Inclusive of all applicable taxes). The Written Down Value as per books of accounts is Rs. 47 Lakhs at the time of selling.

After verifying the submissions from both sides, the bench ruled that the subject car has engine capacity exceeding 1500 cc, length > 4000 mm, and ground clearance > 170 mm, with diesel as its fuel.

“As the applicant submits that it has not availed ITC, We find this used car to fall under the category of sr no 3 to Notification 8/2018-CT (R) dated 25-1-18,” the bench said.

“As the applicant submits that it has not availed ITC, We find this used car to fall under the category of sr no 3 to Notification 8/2018-CT (R) dated 25-1-18,” the bench said.

“The Value for intended supply shall be the difference between the consideration received for supply of said car and the depreciated value of the said car on the date of supply. Depreciation is as per Section 32 Income Tax Act,” it added.

“GST rate leviable is 18% (9% CGST & 9% SGST). Valuation & GST rate of intended supply is as per Ruling at sr no 1 & 2. Valuation, as per Explanation (i) to said Notification 8/2018-CT(R), is exclusive of GST,” the bench ruled.

Stability Studies, Technical Testing & Analysis of New Drugs by Pharma Unit not Subject to Service

The Bangalore bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the stability studies and technical testing and analysis of new drugs are not classifiable under the taxable category of “Scientific and Technical Consultant Service” and “Technical Testing and Analysis Service” for the purpose of levy of service tax under the provisions of the Finance Act, 1994.

The appellants M/s. Apotex Research Pvt. Ltd. have two 100% EOU units registered and have obtained service tax registration. One unit of the appellant is engaged in manufacture and export of pharmaceutical products and the other unit is engaged in rendering Research and Development services. The department was of the view that the the stability studies and technical testing and analysis of new drugs were classifiable under the taxable category of “Scientific and Technical Consultant Service” and “Technical Testing and Analysis Service”.

Revenue also opined that various services like procurement of raw materials and packaging materials; development of analytical method; innovator/ competitor sample analysis; prototype formulation development; product specification development; exhibit batch manufacturing; stability study and data generation; bioequivalence study and data generation; compilation of data and dossier preparation and submission to various regulatory agencies to obtain approval; commercial batch manufacturing, analysis and packing and export of finished goods.

The counsel for the appellant, Shri Vedhagiri N.C contended that the issue is no longer res integra as the department themselves in subsequent proceedings decided the issue in their favour.

The Tribunal bench comprising Shri, S.K. Mohanty, Judicial Member and Shri P.Anjani Kumar, Technical Member observe that the Tribunal, in the case of the appellants themselves have decided the very same issue in favour of the appellants vide Final Order No. A/20003/2022 dated 04/01/2022.

Holding in favour of the assessee, the Tribunal held that “Heard both sides and perused the records of the case. As submitted by the learned counsel for the appellants, the issue stands settled in favour of the appellants by this Bench vide Final Order cited above. In view of the same, we find that the impugned order is not sustainable and thus, liable to be set aside. We do so and allow the appeals with consequential relief, if any, as per law.”